DAMMAM, 4 March 2007 —  A high-ranking official of the Council of Saudi Chambers of Commerce (CSCC) has stressed the need for small- and medium-size businesses to merge in order to become powerful entities capable of facing the challenges of the changing market environment.

Salman Al-Jashi, deputy chairman of the national industrial committee at the CSCC and the chairman of the industrial committee in the Eastern Province Chamber of Commerce and Industry (EPCCI), told Arab News yesterday that “following the freeing up of the markets in line with the demands of the WTO, the pressure from the international companies will be building up particularly against the smaller establishments in the Kingdom.”

“Therefore it is vital that the smaller establishments merge into powerful companies with special stress on the finished products,” he pointed out.

Al-Jashi said it was significant to have independent legal committees in the Kingdom to look into the disputes arising because of the increasing competition between the companies in the Kingdom and foreign companies following the Kingdom’s accession to the World Trade Organization.

The Saudi companies should also obtain international standard certifications because such certificates would be the criterion for quality in the foreign markets, Al-Jashi said.

Explaining further about the legal matters, Al-Jashi said the companies should be closely familiar with the stipulations and terms of the WTO agreements.

He warned that several legal matters and obligations related to the liberalization of trade in commodities and services and intellectual rights are likely to affect various economic sectors in the Kingdom. So the smaller companies should focus their attention on the legal aspects.

They should also forge new strategies to protect their interests against foreign companies.

He said the period after the accession needed greater cooperation between the public and private sectors.

Al-Jashi, however, viewed the Kingdom’s accession to WTO with satisfaction. He said that it would reflect positively on the Saudi trade from a broader perspective.

The consumers will benefit from the Kingdom’s joining the WTO, as all the manufacturers would be competing to improve the quality of their products without increasing the cost, he said.

The new environment will give considerable boost to the major Saudi industries related to oil, gas, and petrochemicals, he said.

Nabil Shalby, consultant for small and medium establishments at the EPCCI, said that these establishments accounted for 88 percent of the Saudi economic activities.

Shalby emphasized the need for chalking out a strong strategy for the small and medium companies to increase their participation in the growth of the national economy.

The Kingdom is currently relying on giant crude and petrochemicals industries for its major revenues.

Shalby said the government should strive to make the small- and medium-scale sector play a greater role in the sustained Saudi economy and the society. “It is because they are more capable of achieving great social and economic progress by providing more technical and administrative expertise to the workers and investors.”

He, moreover, said that in the US, small- and medium-range companies generated 60 percent of the employment and accounted for 50 percent of the GNP.

In Egypt, meanwhile, 95 percent of the companies belonged to this category and employ 66 percent of the workforce in the country and contribute 76 percent of the GNP.